The Internal Revenue Service “desperately needs more funding” to continue carrying out its mission, according to a government watchdog report released Thursday.

In an annual report to Congress, the National Taxpayer Advocate, Nina Olson, wrote that the IRS faces “unstable and chronic underfunding that puts at risk the IRS’s ability to meet its current responsibilities, much less articulate and achieve the necessary transformation to an effective, modern tax agency.”

At the same time the tax agency has been trying to restore public trust following its treatment of conservative groups applying for tax-exempt status, officials have also been fighting an uphill battle to get lawmakers to approve more in annual funding for the agency.

Budget on the decline

The IRS budget has been on the decline over the past few years — even as the IRS workload has increased.

The agency’s budget last year stood at about $11.2 billion, about $1 billion less than what Congress allotted the agency in 2010. Over the same time, the agency has downsized by about 8,000 employees.

That has had severe implications for the services offered by the agency as well as its ability to enforce tax collections, according to the report.

For example, the agency projects it will only be able to answer 61 percent of customer service calls — equating to 20 million unanswered phone calls — this year, according to the report.

Meanwhile, phone waiting times are approaching 20 minutes “for those lucky enough to get through,” the report stated. A decade ago, the average wait time was less than three minutes, according to the National Treasury Employees Union.

Spending on training employees has also dried up in recent years. Total dollars spent on training declined from $172 million in 2010 to $22 million in 2013 — a more than 80 percent decline.

“The IRS not only has fewer employees than four years ago, but those who remain are less equipped to perform their jobs and to understand and respect taxpayer rights,” the report stated.

Budget cuts ‘self-defeating’

According to the taxpayer advocate report, Congress’ tightening of the purse strings has actually been counterproductive.

In fiscal 2013, the IRS collected $255 for every dollar it received in appropriations.

“It is therefore self-defeating to treat the IRS like a pure spending program in which a dollar spent is simply a dollar spent,” the report concluded. “With the IRS, a dollar spent generates many dollars in additional revenue, thereby reducing the budget deficit.”

Those conclusions are in line with a Treasury Inspector General for Tax Administration report published last fall. Tax collections fell by $5 billion in 2012 in large part because of the budget crunch, TIGTA reported, even as the agency was straining under an increased workload.

NTEU, the largest union of IRS employees, also championed the report’s recommendations.

“All the numbers that should be going up — taxpayers helped, calls answered, tax issues resolved, training completed — are going down, while all the numbers that should be decreasing are rising — identity theft cases, telephone wait times, delays in answering letters,” NTEU President Colleen Kelley said in a statement.

2013 a tumultuous year for IRS

2013 proved to be a tumultious year for the agency. In the spring, revelations that IRS officials in the agency’s tax-exempt office had improperly targeted conservative groups for extra scrutiny roiled through the agency. The scandal led to the resignation of the acting IRS chief, Steven Miller, leaving the agency without a Senate-confirmed leader for more than year. Later, IRS officials announced the start of the 2014 filing season would be delayed because of the 16-day government shutdown in October.

The lack of consistent long-term funding stream has exacerbated many of these short-term crises, driving the agency to short-sighted solutions, “that merely patch over problems and impose unnecessary burden and even harm on taxpayers,” according to the taxpayer advocate report.

Late last month, the Senate confirmed John Koskinen, President Barack Obama’s pick to lead the agency for a five-year term. In his nomination hearing, Koskinen pushed for a budget increase.

“I don’t know any organization in my 20 years of experience in the private sector that has said ‘I think I’ll take my revenue operation and starve it for funds to see how it does,'” Koskinen said in his prepared testimony.

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